Revenue raising measures on hold

The tax-writing House Ways & Means Committee had been scheduled to hear a long list of revenue-raising bills this morning, including proposals to raise the state cigarette tax and impose across-the-board cuts to 55 tax exemptions. But those plans were scrapped when a separate bill in the Senate – to do away with the ad valorem tax on business inventories – was set aside by its author. Sen. Robert Adley of Benton told The Advocate’s Tyler Bridges that his about-face was prompted by a Legislative Fiscal Office report that his bill would have no effect on next year’s budget.

Adley cited uncertainty after legislative staff determined that Senate Bill 85 would actually generate no extra money next year and as a result provide no help to filling the $1.6 billion projected budget gap. Adley made the move before the Senate Revenue and Fiscal Affairs Committee, which had made his legislation the first tax bill to be heard this year because its fate would determine how they would handle future revenue-raising proposals. It’s not clear Adley had the votes. In the closing moments of Monday’s Senate session, with practically nobody paying attention, a similar measure, Senate Bill 177, was moved to the Senate Finance Committee, where it’s expected to have a friendlier hearing.

Meanwhile, LBP Director Jan Moller told the Baton Rouge Press Club that any repeal of the inventory tax must come with a plan to replace the revenue that local government stand to lose.

Moller said today that the inventory tax probably should be repealed in the long run because it puts Louisiana at a competitive disadvantage in luring business here. But local municipalities rely on the funds so much that legislators must find a way to replace the money should the pot vanish, Moller said, adding he doesn’t sense an appetite among legislators to simply scale back the tax credit. “If you just get rid of the credit but you leave the tax on the books, then you are effectively raising property taxes at the local level,” Moller said. “In some parishes, the effect would be fairly minimal, but in other parishes, the effects would be rather dramatic.”

Legislators have options on the budget

As lawmakers try to work out a compromise on taxes and spending behind closed doors, Gambit’s Clancy DuBos notes that lawmakers have plenty of options at their disposal. Many of them thanks to Adley, who has filed a prodigious number of bills that deal with the state tax structure.

Some of Adley’s measures are aimed at long-term fixes, such as proposed constitutional amendments that would repeal the inventory tax (Senate Bill 85) and the property tax on stored natural gas (SB 177), dedicate portions of the Transportation Trust Fund (SB 123), scale back the industrial tax exemption starting in 2017 (SB 125), and combine the so-called Rainy Day Fund with the Transportation Trust Fund (SB 202). Adley also proposes some immediate solutions in the form of “veto-proof” concurrent resolutions that would suspend for one year all exemptions and exclusions from the state income tax (SCR 2), severance taxes (SCR 3), corporate income and franchise taxes (SCR 4), sales taxes (SCR 5) and certain excise taxes (SCR 6). In other bills, Adley proposes to limit application of historic and film tax credits (SB 266), limit income and franchise deductions for corporations (SB 269 and 270) and otherwise scale back deductions and tax credits.

Flaws in congressional budget plans

The Center on Budget and Policy Priorities’ Robert Greenstein outlines 10 serious flaws in both the House and Senate’s budget plans. Notably, 69 percent of non-defense cuts in both plans come from programs that help low- to moderate-income Americans. Those programs represent only 23 percent of total federal spending. Other flaws identified by Greenstein include:

Deficit reduction entirely through massive spending cuts and more cuts in essential domestic investments after 2016. Both plans cut non-defense discretionary (NDD) funding well below the already damaging sequestration levels after 2016. This part of the budget funds education, job training, early intervention programs for children, basic scientific and medical research, and infrastructure — which increase opportunity, raise productivity, and thereby boost long-term economic growth.

Common Core battle continues

An effort by Rep. Brett Geymann of Lake Charles to keep his anti-common core bill out of the House Education Committee failed by a vote of 37 to 61 on the House floor. Many other bills aimed at eliminating Common Core standards died in the committee last session, and Geymann said he did not think his bill would not get a fair hearing. The Advocate’s Will Sentell reports that other legislators disagreed:

However, some lawmakers opposed the effort because they saw it as undermining legislative tradition that relies on committees to review bills. “Let there be a thorough vetting of the process,” said House Speaker Pro Tem Walt Leger III, D-New Orleans. State Rep. Patricia Smith, D-Baton Rouge and a member of the committee, disputed arguments that the bill would not get a fair hearing. “We have had committee meetings until 2 o’clock in the morning,” Smith said. “Everybody gets heard in education.”

Number of the Day

0 – The amount of money congressional budget proposals seek to cut from tax expenditures in order to deal with the federal deficit (Source: Center on Budget and Policy Priorities)